AEIdeas

The public policy blog of the American Enterprise Institute

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Discussion: (1 comment)

  1. Benjamin Cole

    While less regulation the better, I am surprised at Pethokoukis on this one: Japan’s obvious, glaring problem has been tight money!

    The Bank of Japan has pursued zero inflation since 1992 (until very recently), and the results are a debacle.

    The yen has soared, proof money was tight.

    Milton Friedman famously advised the Bank of Japan to buy bonds and keep buying bonds until they saw real robust growth and inflation. See his seminal piece:

    http://www.hoover.org/publications/hoover-digest/article/6549

    Japan is an example of what sustained tight money can do to a nation.

    Is Japan more or leas heavily regulated then the USA? Who knows? State and local regs? Fed regs? Tax laws?
    You could spend a lifetime trying to prove that Japan or the USA was the most hidebound.

    Listen, in SoCal conservative Orange County, they nixed an international airport, and in Newport Beach you have to get permission from voters to build a structure of more 250,000 square feet. A lot of land was recently and dramatically downzoned as voters do not want too many houses in their neighborhoods.

    So we are lecturing Japan to loosen up?

    But monetary policy is clear—the Bank of Japan asphyxiated their economy.

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